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(f) The exemption granted pursuant to this rule shall apply to any liability under section 16 (b) existing at or after the effective date of this rule, but shall not be deemed to affect judgments rendered prior to that date.

Rule X-16B-7. Exemption From Section 16 (b) of Certain Acqui

sitions and Dispositions of Securities Pursuant to Mergers

or Consolidations. (a) The following transactions shall be exempt from the provisions of section 16 (b) as not comprehended within the purpose of said subsection:

(1) The acquisition of a security of a company, pursuant to a merger or consolidation, in exchange for a security of a company which, prior to said merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except, in the case of consolidation, the resulting company;

(2) The disposition of a security, pursuant to a merger or consolidation of a company which, prior to said merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except, in the case of consolidations, the resulting company;

(3) The acquisition of a security of a company, pursuant to a merger or consolidation, in exchange for a security of a company which, prior to said merger or consolidation, held over 85 percent of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values prior to the merger or consolidation as determined by reference to their most recent available financial statements for a twelve-month period prior to the merger or consolidation.

(4) The disposition of a security, pursuant to a merger or consolidation, of a company which, prior to said merger or consolidation, held over 85 percent of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values prior to the merger or consolidation, as determined by reference to their most recent available financial statements for a 12-month period prior to the merger or

consolidation. (6) A merger within the meaning of this rule shall include the sale or purchase of substantially all the assets of one company by another in exchange for stock which is then distributed to the security holders of the company which sold its assets.

(c) Notwithstanding the foregoing, if an officer, director or stockholder shall make any purchase (other than a purchase exempted by

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this rule) of a security in any company involved in the merger or consolidation and any sale (other than a sale exempted by this rule) of a security in any other company involved in the merger or consolidation within any period of less than 6 months during which the merger or consolidation took place the exemption provided by this rule shall be unavailable to such officer, director, or stockholder. EXEMPTION OF CERTAIN SECURITIES FROM

SECTION 16 (c) Rule X-16C-1. Exemption of Certain Securities From Section

16 (e). Any security shall be exempt from the operation of section 16 (c) to the extent necessary to render lawful under such section the execution by a broker of an order for an account in which he has no direct or indirect interest. Rule X-16C-2. Exemption From Section 16 (c) of Certain Dis

tributing and Underwriting Transactions. (cc) l'pon the condition specified in paragraph (6) of this rule, any security shall be exempt from the operation of section 16 (c) to the extent necessary to render lawful under such section any sale made by or on behalf of a dealer in contemplation of a distribution (1) where the sale is represented by an over-allotment in which the dealer

participates as a member of an underwriting group, or (2) where the dealer intends in good faith to otfset such sale with a security which he will receive as a participant in an underwriting or selling group of which he is a member at the time of the sale, whether or not the amount of the security he will so receive is subject to a prior offering to existing securityholders or some other class of persons. As used in this paragraph, the term "distribution” means a distribution on behalf of the issuer, any person directly or indirectly controlling or controlled by the issuer, or any person under direct or indirect common control with the issuer.

(6) The exemptions granted by paragraph (a) shall be subject to the condition that, if the dealer is either (1) an officer or director of the issuer, (2) a firm of which an officer or director of the issuer is a partner, employee, appointee, nominee or representative, or (3) a corporation or other person in respect of which an officer or director of the issuer is an officer, director, employee, appointee, nominee, representative or beneficial owner, directly or indirectly, of more than 10 per centum of any class of equity security, then one or more other persons who are not specified in clause (1), (2), or (3) of this paragraph shall have participated in the distribution as members of the underwriting group (or, in the case of the second exemption, the underwriting group or the selling group or both) on terms at least as favorable as those on which such specified persons have participated and to an extent at least equal to the aggregate participation of all such specified persons: Provided, That the performance of the functions of manager of a distributing group and the receipt from the group of a bona fide payment for performing such functions shall not be deemed to destroy an exemption which otherwise would be available pursuant to this rule. Rule X-16C-3. Exemption of Sales of Securities To Be Acquired.

(a) Whenever any person is entitled, as an incident to his ownership of an issued security and without the payment of consideration, to receive another security "when issued” or “when distributed,” the security to be acquired shall be exempt from the operation of section 16 (c), provided that:

(1) the sale is made subject to the same conditions as those attaching to the right of acquisition, and

(2) such person exercises reasonable diligence to deliver such security to the purchaser promptly after his right of acquisition matures, and

(3) such person reports the sale on the appropriate form for

reporting transactions by person subject to section 16 (a). (6) This rule shall not be construed as exempting transactions involving both a sale of a security “when issued” or “when distributed”

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a and a sale of the security by virtue of which the seller expects to receive the “when-issued” or “when-distributed” security, if the two transactions combined result in a sale of more units than the aggregate of those owned by the seller plus those to be received by him pursuant to his right of acquisition.

ARBITRAGE TRANSACTIONS
Rule X-16D-1. Arbitrage Transactions Under Section 16.

It shall be unlawful for any director, or officer of an issuer of an equity security which is registered on a national securities exchange to effect any foreign or domestic arbitrage transaction in any equity security of such issuer, whether registered or not, unless he shall include such transaction in the statements required by section 16 (a) and Rule X-16A-1 and shall account to such issuer for the profits arising from such transaction, as provided in section 16 (b). The provisions of section 16 (c) shall not apply to such arbitrage transactions. The provisions of Rule X-16A-1 and of section 16 shall not apply to any bona fide foreign or domestic arbitrage transaction insofar as it is effected by any person other than such director or officer of the issuer of such security.

PRESERVATION OF RECORDS AND REPORTS OF

CERTAIN STABILIZING ACTIVITIES

Rule X-17A-2. Reports of Certain Stabilizing Activities.

(a) Every member of a national securities exchange, and every broker or dealer who transacts a business in securities through the medium of any such member, and every broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934, as amended, who effects any purchase for the purpose of pegging, fixing, or stabilizing (hereinafter referred to as stabilizing) the price of any security to facilitate an offering in respect of which a registration statement is filed under the Securities Act of 1933, as amended, shall send to the Commission a report on form X-17A-1

(1) On the first business day following each day on which any purchase or sale of the offered security or the security being stabilized is effected by the manager of the stabilizing syndicate, as such, or if there is no such syndicate, by such member, broker or dealer, for any account;

(2) On the first business day following each day on which such member, broker or dealer effects, otherwise than through the manager of the stabilizing syndicate, any purchase or sale of the offered security or the security being stabilized, for any account; and

(3) Within three business days following the date on which the stabilizing is commenced, for each day in the twenty days preceding such date on which such member, broker, or dealer effected, for his own account any purchase or sale of the offered security or the security being stabilized.

(6) Notwithstanding the provisions of paragraph (a), in the case of an offering made at a fixed public offering price, no report need be filed for any day solely because of a retail sale of the offered security at such public offering price. In such cases, there shall be disclosed in the next report required to be filed pursuant to paragraph (a), the total of all such retail sales by the reporting person which were not previously reported.

(c) Promptly upon the termination of the stabilizing, written notice of such termination shall be given to the Commission. The reports required by clauses (1) and (2) of paragraph (a) shall be filed until the stabilizing is terminated and the Commission is so

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notified, except that if any stabilizer then has a short position in any such security, he shall send to the Commission a report on form X-17A-1 on the first business day following each day on which the manager of the stabilizing syndicate, as such, effects any purchase to cover such short position, and a report on that form on the first business day following each day on which such stabilizer effects a purchase, otherwise than through such manager, to cover such short position. Separate reports shall be filed as to each such security and may be filed by one or more of the stabilizers on behalf of any of the stabilizers. For the purpose of this rule and the forms prescribed hereby, the term "offered security” includes any security of the same class. Reports filed pursuant to this rule will be available for public inspection after the stabilizers have filed all the reports required thereby.

(d) Promptly upon the termination of the stabilizing, if any stabilizer then has a long position in the offered security, he shall promptly notify the Commission in writing of the amount of such long position, unless he is filing, pursuant to paragraph (a), a report for the date of termination. Rule X-17A-3. Records To Be Made by Certain Exchange Mem

bers, Brokers, and Dealers. (a) Every member of a national securities exchange who transacts a business in securities directly with others than members of a national securities exchange, and every broker or dealer who transacts a business in securities through the medium of any such member, and every broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934, as amended, shall make and keep current the following books and records relating to his business :

(1) Blotters (or other records of original entry) containing an itemized daily record of all purchases and sales of securities, all receipts and deliveries of securities (including certificate numbers), all receipts and disbursements of cash and all other debits and credits. Such records shall show the account for which each such transaction was effected, the name and amount of securities, the unit and aggregate purchase or sale price (if any), the trade date, and the name or other designation of the person from whom purchased or received or to whom sold or delivered.

(2) Ledgers (or other records) reflecting all assets and liabilities, income and expense and capital accounts.

(3) Ledger accounts (or other records) itemizing separately as to each cash and margin account of every customer and of such member, broker or dealer and partners thereof, all purchases, sales, receipts,

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